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    HKMA Implementation Guidance on Securitization Framework for Banks

    March 26, 2018

    HKMA published a set of questions and answers (Q&A) on the revised securitization framework under the Banking (Capital) Rules (BCR). This set of Q&A supersedes the guidance on securitization set out in pages 52 to 66 of the revised Questions and Answers on BCR, which were issued on December 31, 2014.

    These Q&A were built on the existing Q&A, with modifications to align with the amendments made to Part 7 of the BCR and to clarify the policy intent in respect of specific issues. New guidance is provided on the notification requirement under section 230(3), (4), and (5) in Part 7 and the assessment of significant credit risk transfer for obtaining capital relief for the underlying exposures of a securitization transaction under the BCR. HKMA responses to the industry during the consultations conducted in 2017 on the implementation of the revised securitization framework in Hong Kong had mentioned that supplementary guidance will be provided to assist authorized institutions in interpreting Part 7 of BCR (as amended to implement the framework) at a more detailed level in a number of specific areas. This supplementary guidance is now being provided in the form of this set of Q&A.

    The Q&A have been drafted, as far as possible, in simple non-legal language to facilitate consistent interpretation and application of the capital or disclosure requirements. They are, however, explanatory and supplementary in nature and do not seek to replace any requirements in the BCR. Also, the Q&A are inevitably general in scope and do not take into account the particular circumstances of individual authorized institutions. 

    Keywords: Asia Pacific, Hong Kong, Banking, Securitization, Q&A, Banking Capital Rules, HKMA

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